NON-QUALIFIED STOCK OPTION UNDER 1981 INCENTIVE STOCK PLAN OF UAL CORPORATION This Option, granted this 12th day of July, 1994 by UAL Corporation, a Delaware corporation (hereinafter called the 'Company'), to Stuart I. Oran, an employee of the Company or one of its subsidiaries (hereinafter called the 'Employee'). WITNESSETH: The object of this Option is to provide a means to permit the Employee to acquire shares of Common Stock, $.01 par value per share (hereinafter referred to as 'Common Stock'), of the Company pursuant to a non-qualified option for the purposes set forth in the 1981 Incentive Stock Plan. NOW, THEREFORE, the Company hereby grants to the Employee an option (hereinafter called the 'Option') to purchase, from time to time, all or any part of a total of 55,000 shares of Common Stock during a period commencing on the date of this Option and ending July 11, 2004, ten years after the date of the Option (hereinafter called the 'Option Period'), upon and subject to the following terms and conditions: 1. For any shares of Common Stock purchased at any time during the Option Period, the Employee shall pay to the Company Ninety Dollars and Twelve and One-half Cents ($90.125) per share (hereinafter called the 'Option Purchase Price'), being not less than 100% of the fair market value of the shares on the date hereof. 2. The Option may be exercised, subject to provisions herein relative to its termination and to the provisions of Section 3 hereof, only within the Option Period and only (a) by notices in writing of intent to exercise the Option, each of which notices shall state the number of shares in respect of which the Option is exercised, delivered to the Corporate Secre tary of UAL Corporation, or mailed by registered or certified mail addressed to the Corporate Secretary of UAL Corporation, P. O. Box 66919, Chicago, Illinois 60666, from time to time, until said total of 55,000 shares has been purchased, and (b) by payment to the Company of the aggregate Option Purchase Price for the number of shares in respect of which the Option is exercised (together with any taxes required to be withheld) contemporaneously with its receipt of each such notice. Payment of such aggregate Option Purchase Price may be made, in whole or in part, by the delivery of whole shares of Common Stock which (i) have a market value equal to such aggregate Option Purchase Price (or equal to the portion of such aggregate Option Purchase Price being paid with such shares), (ii) are held of record by the Employee and (iii) have been owned by the Employee, either of record or beneficially through a broker or other nominee, for at least six months. The Company may require at the time the Option is exercised a written statement of the person exercising the Option that his intention is to acquire the shares for investment and without a view to their distribution. 3. The Option is subject to the following limitations upon its exercise: (a) Up to 17,500 shares may be acquired immediately, and the right to purchase an additional 10,000 shares shall accrue to the Employee on January 15, 1995. (b) At the commencement of each of the four (4) twelve (12) month periods immediately following July 11, 1995, the right to purchase an additional 6,875 shares shall accrue to the Employee. Each such right to purchase may be exercised, in whole or in part, at any time after such right accrues and within the Option Period. (c) In addition to the rights to purchase shares which accrue pursuant to the foregoing provisions of this Section 3, upon cessation of employment on account of a termination by the Company of the Employee's employment with the Company without cause, any and all rights to purchase shares that would have accrued within 12 months after the date of termination shall accrue effective as of the day prior to the date of cessation of employment. 4. The Option is not transferable by the Employee, otherwise than by will or the laws of descent and distribution, and may be exercised, during the lifetime of the Employee, only by the Employee. 5. The Option shall terminate on the earlier to occur of July 11, 2004 or, if the Employee's employment (by the Company or any of its Subsidiaries) shall cease under any circumstances except retirement or death, six (6) months after such cessation, and may be exercised only in respect of the number of shares which the Employee could have acquired under the Option by the exercise thereof immediately prior to such cessation of employment (treating, for this purpose, rights to acquire shares which vest pursuant to Section 3 above as if they could have been exercised immediately prior to such cessation). If cessation of employment occurs by reason of the Employee's early or normal retirement under his or her employer's retirement plan ('Retirement'), the Option may be exercised within the fixed expiration date set forth herein, and the right to purchase shares under this option shall continue to accrue to the Employee as provided in Section 3 above. In the event (i) cessation of employment occurs by reason of death of the Employee or (ii) the death of the Employee occurs within six (6) months following such cessation of employment (other than cessation due to Retirement), the Option may be exercised within one year after the date of death (but not later than the fixed expiration date set forth herein) by his estate or by the person or persons to whom his rights under the Option shall pass by will or the laws of descent and distribution, but only in respect of the number of shares which the Employee could have acquired under the Option by the exercise thereof immediately prior to such cessation of employment. In the event of any disagreement as to whether for the purposes of this Option an Employee's employment has ceased, the Committee appointed to administer the 1981 Incentive Stock Plan shall have absolute and uncontrolled discretion to determine whether an Employee's employment has ceased, and the effective date of such cessation of employment, and its determination shall be final and conclusive on all persons affected thereby. 6. The Company shall not be required to issue or deliver any certificate for its Common Stock purchased upon the exercise of this Option prior to compliance by the Company with any requirements of any stock exchange on which Common Stock of the Company may at that time be listed. If at any time during the Option Period the Company shall be advised by its counsel that the shares of Common Stock deliverable upon an exercise of the Option are required to be registered under the Federal Securities Act of 1933, as amended, or any state securities law or that delivery of such Common Stock must be accompanied or preceded by a Prospectus meeting the requirements of such Act, the Company will use its best efforts to effect such registration or provide such Prospectus not later than a reasonable time following each exercise of this Option, but delivery of Common Stock by the Company may be deferred until such registration is effected or such Prospectus is available. If at any time during the Option Period the Company shall be advised by its counsel that the Common Stock deliverable upon exercise of this Option are subject to the restrictions on sale imposed on 'affiliates' under Rule 144 of the Federal Securities Act of 1933, the Employee will use his best efforts to comply with said Rule 144. The Employee shall have no interest in Common Stock covered by this Option until certificates for said shares of Common Stock are issued. 7. In the event the outstanding shares of Common Stock of the Company shall be changed into an increased number of shares, through a stock dividend or a split-up of shares, or into a decreased number of shares, through a combination of shares, then immediately after the record date for such change, the number of shares of Common Stock then subject to the Option shall be proportionately increased, in case of such stock dividend or split-up of shares, or proportionately decreased, in case of such combination of shares, and the Option Purchase Price under such Option shall be adjusted to such amount that the aggregate cost of the shares subject to such Option immediately after such increase or decrease in shares shall be the same as the aggregate cost of the shares subject to such Option immediately prior to such increase or decrease in shares. In the event that, as a result of a reorganization, sale, merger, consolidation or similar occurrence, there shall be any other change in the shares of Common Stock of the Company, or of any stock or other securities into which such Common Stock shall have been changed, or for which it shall have been exchanged, then the Board of Directors of the Company shall make such equitable adjustments to the Option (including, but not limited to, changes in the number or kind, or the Option Purchase Price, of shares then subject to the Option), as it shall deem appropriate, and any such adjustments shall be effective and binding on the Employee for all purposes of the Option. 8. Notwithstanding anything in this Agreement to the contrary, the Employee may elect, prior to or upon the exercise of the Option, to satisfy any Federal, State, local, FICA, Medicare or other tax obligation attributable to the exercise of the Option by having the Company withhold from the Common Stock a number of whole shares of Common Stock with a fair market value equal to the amount of such tax obligations with respect to which such election is made (with the Employee to pay in cash any remaining amount of such tax withholding obligation which is less than the fair market value of a whole share). The amount withheld pursuant to this Section shall be calculated based upon such tax rate or rates as the Employee shall elect, provided however, that no such rate may exceed the highest applicable marginal tax rate to which the Employee could be subject. 9. This Option shall be binding upon and inure to the benefit of the parties hereto and the successors and assigns of the Company and the heirs and personal representatives of the Employee. 10. This Option shall be governed by the laws of the State of Illinois applicable to agreements made and to be per formed entirely within such State. 11. Except as expressly provided herein, this Option may not be altered, modified, changed or discharged, except by a writing signed by or on behalf of both the Company and the Employee. IN WITNESS WHEREOF, the Company has executed this Option on the day and year first above written. UAL CORPORATION By /s/ Gerald Greenwald Chairman and Chief Executive Officer ACCEPTED: /s/ Stuart I. Oran (Signature of Employee)
Non-Qualified Stock Option - UAL Corp. and Stuart I. Oran
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